Correlation Between Advance Auto and U Power
Can any of the company-specific risk be diversified away by investing in both Advance Auto and U Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Advance Auto and U Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Auto Parts and U Power Limited, you can compare the effects of market volatilities on Advance Auto and U Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Advance Auto with a short position of U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and U Power.
Diversification Opportunities for Advance Auto and U Power
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Advance and UCAR is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and U Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Power Limited and Advance Auto is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Advance Auto Parts are associated (or correlated) with U Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Power Limited has no effect on the direction of Advance Auto i.e., Advance Auto and U Power go up and down completely randomly.
Pair Corralation between Advance Auto and U Power
Considering the 90-day investment horizon Advance Auto Parts is expected to under-perform the U Power. But the stock apears to be less risky and, when comparing its historical volatility, Advance Auto Parts is 1.61 times less risky than U Power. The stock trades about -0.27 of its potential returns per unit of risk. The U Power Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 315.00 in U Power Limited on December 1, 2024 and sell it today you would lose (39.00) from holding U Power Limited or give up 12.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advance Auto Parts vs. U Power Limited
Performance |
| Timeline |
| Advance Auto Parts |
| U Power Limited |
Advance Auto and U Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and U Power
The main advantage of trading using opposite Advance Auto and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, U Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in U Power will offset losses from the drop in U Power's long position.| Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto vs. Five Below |
| U Power vs. Kaixin Auto Holdings | U Power vs. Uxin | U Power vs. SunCar Technology Group | U Power vs. Carvana Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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